Take-Two

Oh it’s the video game breakup of the century. Instead of these two goliaths hooking up and making whoopee, Electronic Arts has decided to call off its proposed union with Take-Two Interactive. What does this mean for both companies? Oh well, Wall Street is deciding to punish them both by torpedoing their stocks.

Take-Two has fallen 22.02 percent to $17.07 and EA has dipped to $44.42 a drop of 1.27 percent as of 10:33 PDT. We’ll update the finally stock price at the closing bell, which will be in the middle of the day.

Frankly, I don’t think this is a huge deal in the bigger perspective. From what I hear, pretty much every market is tanking right now. It’s going to be a very merry holiday season.

UPDATE: The market has been closed for the past two hours. Here’s how it turned out. Electronic Arts fell to $43.30, a loss of 3.76 percent. Meanwhile, Take-Two continued to fall and hit $16.57, drop of 24.30 percent. Not good news for either side.

I mentioned this a couple of days ago, but the weird kabuki dance between Electronic Arts and Take Two. Take Two let EA’s unsolicited offer expire on Monday, and the two companies signed a deal to explore “strategic alternatives.”

Well, now Reuters is reporting that it has no problems with a possible EA deal with Take Two. An interesting tidbit behind this courting process is that EA CEO John Riccitiello, and Take-Two Executive Chairman Strauss Zelnick over the weekend, according to EA.

We all know that Electronic Arts has been eyeing Take Two for a while now. The company that publishes the 2K Sports games and the Grand Theft Auto franchise has key properties that EA would love to snatch up.

Well, after the Redwood City company’s initial offer was rejected. I thought it would be settled: no sale. But apparently, it’s not so simple. Although EA’s offer expired on Monday, the L.A. Times says the deal isn’t dead yet. We kind of got that impression from this press release on Monday.

The two companies are trying to work together to seek strategic alternatives now that EA’s initial offer is officially dead. I suppose this could either be a prelude to a megadeal or something else. We’ll have to wait on Thursday at the earliest for the story to move forward. That’s when the Federal Trade Commission will conclude its antitrust investigation of a potential deal.

Electronic Arts, the least ethical of game publishers, has reportedly purchased GTAForums.com for $3.4 million.

A publisher buying an independently run fansite is not good in any situation. A site not officially associated with the game is generally more honest so they fill a valuable role. However it becomes infinitely less good it’s a fansite for a game that your company does not publish.

If, of course, it’s true.

Why do I say that? Because my Spider Sense is tingling. The more I look into this the more skeptical I become. But at the same time, because it’s EA, it’s entirely possible. So let’s stack up the evidence on both sides.

Reasons This Is Entirely Possible:

EA has been trying to forcibly buy GTA publisher Take-Two for a while now. They’ve already used a couple unethical strategies to that end. What’s one more?

The story is widely reported. If it was untrue you’d think EA would have denied it by now. They get enough bad publicity for things they actually do, they don’t need bad publicity for things people made up.

This is EA we’re talking about. If it was Activision who reportedly bought a fansite we’d never buy it and there’s a reason for that. They do have a history of this sort of thing.

Reasons This Is Probably Fake:

Why would EA put their logo at the top of the page? This isn’t the sort of thing you brag about. If they did it, they’d stay in the shadows.

The heavily blacked out memo isn’t on EA stationary. They do have letterhead, why wouldn’t they use it for something like this?

The only part of the site mentioned, and the only part visually affected, are the forums. The only person quoted and the source of all the information is the guy in charge of the forum. It’s March 24. There’s an excellent chance he’s going to say, “Ha ha! Gotcha!” on April 1.

I’ve tried to contact EA to get an official confirmation or denial, I’ll update as more info comes in. But for now what do you think? Yea or nay?

Let the drama unfold. The report says that the publisher of Grand Theft Auto IV rejected the deal. And in response, EA went public with the proposal, hoping to (ahem) inform investors.

What comes next can dramatically reshape the landscape of games, particularly sports titles. Take-Two is a conglomerate that owns the 2K Sports brand in addition to the Bioshock franchise and of course Rock Star.

So if EA buys out Take-Two, what does that mean for 2K Sports’ NBA, NHL and MLB titles? Could this deal effectively end the rivalry between EA Sports and 2K Sports?